"The reason why firms charge a lower price at higher output levels because they are able to spread their fixed costs over a large production run"
This is a true of false question and I would just like to know where i might look to answer this question, i.e. is it something to do with perfect competion or is it regarding short run production??

The answer is false. What level of output do we market economists say a firm operates at? Always, where Marginal cost=Marginal revenue. Always.
Since fixed costs contribute nothing to the calculation of marginal costs, the answer is false.

Hi John, please listen during your lectures next time - even if you don't please read your notes or your textbook. This has nothing to do with perfect competition - and has everything to do with short run production. As you know, fixed costs do not exist in the long run.

Now onto the question, I'm not allowed to give assignment answers so I'll give you a hint. Fixed costs stay the same for the whole of the firm's output. What happens as output increases? What effect does this have on their profits i.e. revenue - costs? It's pretty obvious. :D

Now go back to your assignment.

  1. 👍
  2. 👎
  3. 👁

Respond to this Question

First Name

Your Response

Similar Questions

  1. Social studies

    1. Why do businesses seek an equilibrium price? A. It ensures that competitors cannot offer lower prices B. It attracts the largest possible number of consumers to the business •• C. It provides the highest possible prices

  2. stats

    A study by Hewitt Associates showed that 79% of companies offer employees flexible scheduling. Suppose a researcher believes that in accounting firms this figure is lower. The researcher randomly selects 415 accounting firms and

  3. Economics

    Suppose a manager is interested in implementing third-degree price discrimination. The manager knows that the price elasticity of demand for Group 1 is -2 and the price elasticity of demand for Group 2 is -1.2. Based on this

  4. managerial economics

    The cost function for a firm is given by TC = 500 + Q2. The firm sells output in a perfectly competitive market and other firms in the industry sell at a price of $100. a) What price should the manger of this firm put on its

  1. Economic

    Suppose that labor is the only input used by a perfectly competitive firm that can hire workers for $50 per day. The firm’s production function is as follows: Days of Labor/Units of Output: 0/0, 1/7, 2/13, 3/19, 4/25, 5/28,

  2. Social Studies

    1. Why do businesses seek a equilibrium price? A)It ensures that competitors cannot offer lower prices B)It attracts the largest possible number of consumers to the business C)It provides the highest possible prices that consumers

  3. economics

    perfectly competitive industry. Each firm having identical cost structures. long-run average cost is minimized at an output of 20 units. Minimum average cost is $10 per unit. total market demand is Q=1500-50P. What is the long-run

  4. Math

    Ms. Allison drew a box-and-whisker plot to represent her students scores on a midterm test. These are the numbers on the box-and-whisker plot. Lowest value=44 Lower quartile=47 Median=52 Upper quartile=81 Highest value=96 Jason

  1. Microeconomics - Oligopoly

    Two firms decide to form a cartel and collude in a way that maximizes industry profits. Each firm has zero production costs and each firm is given a positive output quota by the cartel. Which of the following statement(s) are NOT

  2. Managerial finance

    Can u please help me on this: High cash flow is generally associated with a higher share price whereas higher risk tends to result in a lower share price. is it true of false?? and why thx

  3. Economics

    The market for fertilizer is perfectly competitive. Firms in the market are producing output, but they are currently making economic losses. a. How does the price of fertilizer compare to the average total cost, the average

  4. CHEM Periodic Trends

    Each of the statements below attempts to explain why some periodic property varies predictably among elements in the periodic table. Determine if each statement is true or false. Within a family, elements with higher atomic

You can view more similar questions or ask a new question.